Weatherly Lumber Company processes wood pulp for manufacturing various paper pro

Question

Weatherly Lumber Company processes wood pulp for manufacturing various paper products. The company employs a process costing system for its manufacturing operations. All direct materials are added at the beginning of the process, and conversion costs are incurred uniformly throughout the process. This is the company’s production schedule for May:

The following cost data are available:

Required:

1. Calculate the equivalent units of direct materials and conversion during May. Use the FIFO method.

2. Calculate the cost per equivalent unit for both direct materials and conversion during May. Use the FIFO method.

Percent Completed Tons of Pulp Materials Conversion Work-in-Process Inventory, May 1 3,000 100 % 50 % Started during May 14,000 Units to account for 17,000 Units from beginning Work-in-Process, which
were completed and transferred out during May 3,000 Started and completed during May 8,400 Work-in-Process Inventory, May 31 5,600 100 % 50 % Total units accounted for 17,000

Explanation / Answer

a Physical units Direct materials Conversion Work-in-Process Inventory, May 1 3000 0 1500 Started and completed during May 8400 8400 8400 Work-in-Process Inventory, May 31 5600 5600 2800 Equivalent units 17000 14000 12700 b Direct materials Conversion Costs incurred during May 217560 255270 Divided by Equivalent units 14000 12700 Cost per equivalent unit 15.54 20.1

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